D’Amato: Wall Street’s goons don’t deserve our money

There should be no doubt in anyone’s mind that many of our nation’s financial institutions are in great peril. The administration and Congress have been rolling out bailout plan after bailout plan, with no end in sight. In his first presidential budget message, President Barack Obama said the American people inherited a “legacy of mismanagement and misplaced priorities” and an “era of profound irresponsibility.” I would argue that it was much more than profound irresponsibility. There was outright corruption that ran the gamut from the nation’s largest financial institutions to mortgage companies to our rating agencies.

One thing is for certain, by continuing to throw money at the problem without a solution in sight we are only ensuring that other financial institutions suffer the same destiny as AIG, Citigroup and every other corporation who has been bailed out. The longer we allow it to go on, the more the average Long Islander will suffer.

I wonder why we continue to be so concerned with saving the rich guy. Citigroup and AIG, two of the largest financial institutions in the nation, broke every rule in the book, and have put down over $100 billion to date. Now, they seek even more help. Enough is enough. Let them go into bankruptcy! For the little guy, the “moms and pops” of Long Island who run your local deli, dry cleaner or hardware store, there is no bailout. They work hard and have not made wild bets on products that have little value.

The Citigroups and AIGs of the world sold our neighbors worthless mortgages and financial products, claiming that they were AAA rated, when in reality they deserved the rating of junk bonds. They are the greediest of the greedy. Their pompous executive teams, supposed great financial wizards, have made hundreds of millions in compensation. No one said they had to have private planes and fancy houses in East Hampton. Their actions bordered on criminal and they were aided and abetted by the very institutions that were supposed to protect the free market system and the small-time American investor.

Homeowners and small-business owners also suffered at the hands of our rating agencies. The second-largest debacle in our market has been the subprime mortgage crisis and the selling of mortgages to homebuyers who clearly had inherent problems and should not have been granted home ownership. This problem is especially prevalent on Long Island, where last year, fourth-quarter median home prices dropped more than 17 percent. Of all the foreclosure filings in New York, both Nassau and Suffolk counties rank among the top 10 highest in the state. In some cases, as home prices continue to fall, mortgages are exceeding the actual worth of the house itself.

This travesty could not have taken place without the total complicity of America’s rating agencies. To date, I have not read or heard about any comprehensive investigation relating to how these services – Moody’s, Standard & Poor’s, Fitch and others – could have survived when they were stamping junk with a triple-A rating.

If I am in fact correct, why has there not been more of a public outcry? CNBC aired a magnificent expose titled “House of Cards” in which they documented the shocking abdication of responsibility by these agencies. It becomes quite clear after an interview with Anne Rutledge, one of Moody’s own securities raters, they looked the other way because they were afraid to lose business from Wall Street. Asleep at the switch? No. This deception of the American people happened because the agencies did not insist on elementary standards for those who bought homes on Long Island.

The average Long Island taxpayer, who had nothing to do with this, is now losing his or her job and being taxed out of house and home. Yet, we are still shoveling out taxpayer dollars to AIG, Citigroup and General Motors, the very institutions that created this debacle. Why save the banks and corporate America when small-business owners and mom-and-pop stores, the centerpiece of our communities, are going under? Who is bailing them out? It is time to stop using the taxpayer as an ATM.

6 comments

Isn’t it somewhat disingenous for Al D’Amato to complain about special treatment for the rich when that’s exactly what he expected when he built his house in Hempstead, or when his wife got health benefits from a position where no one else did?

Being in the mortgage business as an honest mortgage broker for the past 10 years, there is something that I can not believe is going totally unnoticed- it is the the absolute greed of fannie mae and freddie mac with there latest \price adjustments\ that are absolutely killing the mom and pop’s of America. They have a new formula whereby just about anyone whose credit scores are not above 740 are slammed by mandatory point(s) buying. Some borrowers recently were quoted as much as 4-5 points MANDATED by Fannie Mae!! Not brokers, banks or credit unions. The credit card banks are also slamming the little guy by reducing there credit lines thereby driving credit scores lower and assisting Fannie and Freddie in this incredibly unnoticed scam. Do some research Mr. D’Amato. Contact me ASAP. I can verify what is described above.

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